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State Name: Texas
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State Name dash: Texas
State Name lower underscore: texas
State Name lower dash: texas
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State Abbreviation: TX
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If your loan is already locked, I would be very thankful! We've had a very bad tumble in the past two days.

As we've discussed
previously, the week has been pretty light in terms of scheduled
released economic reports. Instead, the market is getting much more
stimulus from news, announcements, and most importantly today,
Bernanke's testimony in front of congress that is currently still in
process.

Jobless claims came in today almost exactly as
expected. The trade deficit shrunk somewhat, but traders don't really
care this morning. The newsworthy item is Bernanke's testimony. I
don't feel that anything surprising has been said, but nonetheless,
traders draw their own conclusions.

With inflation concerns
looming combined with another extremely poor showing during bond
auctions yesterday, Bernanke's assertion that he is ready to cut rates
again is not helping the bond market. In fact, when the testimony
began, it completely destroyed mortgage pricing, taking mortgage back
securities on roughly a 1% discount point ride for the worse. So any
given interest rate today would cost you another 1%.

The good
news is we've rebounded a little since then as the stock market has
failed to indicate any excitement about this willingness to lower
rates. As the stock market has stayed at about 100 points down, the
mortgage bonds have improved by about half a point. So if this
stabilizes, we may only lose one leg today instead of both of them!

Again,
I'll say we are overrun by lemmings! Everyone seems to be waiting for
someone else to tell them what to think. The testimony began and the
lemmings ran off the mortgage bond cliff. Then the lemmings saw that
that stocks weren't rising and were in fact dropping, so they changes
their direction and are coming back again. Expect more of this in the
hours, days, and weeks to follow. We're dealing with too much emotion
in this market, and not enough cold logic. As such, it's hard to
comment on an immediate market direction.

As far as today, many
lenders released pricing BEFORE the bond rebound, so definitely float
unless you see a big stock market rally. And I would float into
tomorrow and boldly stand toe to toe with consumer sentiment, assuming
again that it will be weak. This is all predicated on a tepid market
reaction today. The testimony is still in progress, and this could
just be the calm before the storm. Money has been pulled out of both
stocks AND bonds. This only happens in a few scenarios, one of them
being attributed to a "wait and see" mentality. So traders are waiting
to see how this testimony will turn out and more importantly,
especially when it comes to lemmings, they are waiting to see what the
other lemmings will do with their money after the testimony is over.

Half the heard could go one way and half the herd the other, but if
they all start running in the same direction, we could experience an
insane amount of volatility later today. If stocks tank, it will help
mortgage rates today, but my looming concern is that the inflation
boogie man seems to be rearing his ugly head again. Remember that
inflation hurts mortgage rates. With oil important prices extremely
high, and FED rates showing the potential to go extremely low,
inflation is now becoming a concern that can no longer be ignored.
Considering the mortgage market is already within 1% of all time lows,
this will represent extreme resistance to rates moving significantly
lower in the short term.

Float today, look out for a Dow Rally or an "up to the minute update" on this site.

About the Author

A former originator, Matthew began writing for Mortgage News Daily in 2007, covering a wide range of topics. Seeing a need in the marketplace, his focus increasingly shifted toward relating MBS and broader financial markets for loan originators.
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